China’s Debt-Trap Diplomacy

Through its $1 trillion “one belt, one road” initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments. As a result, some of these countries are becoming saddled with debt, leaving them even more firmly under China's thumb.

NEW DELHI – If there is one thing at which China’s leaders truly excel, it is the use of economic tools to advance their country’s geostrategic interests. Through its $1 trillion “one belt, one road” initiative, China is supporting infrastructure projects in strategically located developing countries, often by extending huge loans to their governments. As a result, countries are becoming ensnared in a debt trap that leaves them vulnerable to China’s influence.

Of course, extending loans for infrastructure projects is not inherently bad. But the projects that China is supporting are often intended not to support the local economy, but to facilitate Chinese access to natural resources, or to open the market for its low-cost and shoddy export goods. In many cases, China even sends its own construction workers, minimizing the number of local jobs that are created.

Several of the projects that have been completed are now bleeding money. For example, Sri Lanka’s Mattala Rajapaksa International Airport, which opened in 2013 near Hambantota, has been dubbed the world’s emptiest. Likewise, Hambantota’s Magampura Mahinda Rajapaksa Port remains largely idle, as does the multibillion-dollar Gwadar port in Pakistan. For China, however, these projects are operating exactly as needed: Chinese attack submarines have twice docked at Sri Lankan ports, and two Chinese warships were recently pressed into service for Gwadar port security.

A TRANSLATION from englisch to SPANISH of this very clearly view of China's integrated geostrategic policies oriented to take greater control of the decisions of free countries.http://yapukamani.blogspot.com/2017/01/la-diplomacia-de-la-trampa-de.html

No doubt China is cherry picking the successful capitalist economic strategies applied by the Europeans/Americans who for decades have used their World Bank/IMF funds to lure the then third world into debt, as well as forcing them to open their markets to US/EU goods and services by bribing the third world leaders. Yes, the Chinese seem to be excelling in copying the West, just like the Japanese had done after WWII, though not under a one-party state.

In the entire article, I found one small mention of my country Nepal and construction of a dam in one of the rivers. As it should be public knowledge, there are multiple dams in which Indian companies have licences to build similar kinds of projects.
As being the citizen of a Nation between these two countries, my country had to make countless decisions in past to choose between her two neighbours primarily due to the feuds between India and China which has nothing to do with my country.

As living my entire life in one of the most unstable periods of in the history of my country, our southern neighbours has done nothing but fueled our instabilities and with actions like 4 moths long economic blockade in 2015, the result of which we are still feeling. Actions like these by India actually pushed the countries around india to move towards China. I am sure that every country around India has few of these policies towards their neighbours to blame for the governments making the hard choice of dealing with China rather than being bullied by India.

Readers, at the outset, should be on alert while reading this article that the author is an Indian; an enemy country of China. India, at the behest of the West and somewhat of its own, is in a stark competition with China. Though the writer does have some legitimate points of concern, but not necessarily pan out as stated. Point in case is C-PEC of Pakistan. The corruption and Manipulation are order of the day, which includes, IMF, World Bank, IDB & EU financial organs. They are obviously not out there for benevolence but brute bussiness under the aegis of Anti-Human Capitalism. Thanks
shakir2.wordpress.com

Shakir Mumtaz May be you should also clarify that you are from Pakistan, that considers India an enemy country. Yes, India is in a healthy competition with China to an extent, even though India does not match China in most areas. China-India relations are far better than Pakistan India relations, bilateral trade exceeds $ 50 Bn and they have managed to keep their disputed border peaceful for more than 50 years. The main point of the author is not about corruption but debt trap resulting out of low viability of projects & subsequent political implications.

Propaganda? But the article is 100% correct. And it is, so-far, working just as the Chinese intended. But the bottom line is that the various countries will never be able to pay the debt. Just like the state financed and run-Chinese enterprises. Is any of this a path to riches for the Chinese, in the long run? No, it is a disaster. This is like selling at a loss and hoping to get rich on the volume... Anyway, it is sad for the various citizens/residents of those countries who are run by idiotic and criminal despots. Too bad for them. More years of poverty for the citizens.

Exactly. Germany has done exactly the same to the European "periphery" but apparently that's fine. The IMF handing over the keys of countries to Wall Street and "the markets" seems to be fine too. It's a shame that the reporting of such as sad affair should be tainted by the writer's regional angst.

Recently China has been on a tear to add liquidity to its flagging financial system. What it is failing to do is reform. A combination of corruption, to much debt, and policies that misallocates capital will come back to haunt them.

Expect the debate to continue as to whether China has turned the corner, however, one thing is clear and that is money flowing out of the country continues to distort markets across the world. More on this subject in the article below.

The port city project in Sri Lanka must be profitable or the Chinese will not want a 70% share as the writer said. If that is the case the Sri Lankan new government was wrong to cancel the project in a haste, then retract their decision after much destruction to the confidence of investors. Such mistake and losses will repeat if politicians engage in infighting and using unsubstsntiated reports like this one to defame previous government's plan without seeking the truth.

chinese dont want the port for profitability but they want total control over it , it will mostly serve china as a military or naval base for its strategic aims of controlling the indian ocean region, encircling india which is a strategic ally of US etc, also, as the article said the countries take more debt and to pay off earlier debts and china also gets good deals like raw materials or market for dumping goods

For smaller , mostly poor ones, countries Inducements from China come in several forms - long term ,low cost loans, outright parties offs, help from Chineese tech. experts and so on. Just the author mentioned, along come are strings. Markets would be flooded with consumer goods like TVs etc. They destroy local entrepreneurs e forts. Remember, China has no scruples or moral consideration, If there is profits to be made, they would sell their grand mothers. China and its side kick like Pakistan shipped arms to Sri Lanka to crush freedom struggle of Tamil Eelam, again shipment to. Dictator thug-president of Zimbabwe, Same things repeated in Libya or Syria. During Apatheid times accepted "honorary White status" in business deals with Apartheid regimes.
So that states something about mindset of the Chineese!

The points raised in this article carry weight. Government authorities in Pakistan in respect of many projects are even unable to show any feasibility report of the project or competitive bidding process. China is slowing becoming EAST INDIA Company of the modern era. Dirty coal projects- who needs them? Panama named Chinese President in league with Panama named Pakistan PM. Corruption is the rule of the day in this deal. Is example of Sri Lankan airport not true? If it is true, we should accept the facts. If not, someone from Sri Lanka rebut them.

Pakistan is in a better position to see through this game , the Chineese play , for the country has good independent minded intellectuals, free press etc.. It is unlikely it will be run over by Chineese-generosity! Yet, there is temptation to yield to so called free Chinese -China "Marshal Plan" of 50 billion CPEC plan is strong. Anyway, we will see after few years the nature of Chineese good will!

Pundalik, the whole tone of the article is propagandistic. If the author wants to be taken seriously, he should avoid bombastic claims, like all infra-structure built by the Chinese are useless, and only aim to benefit China….

I guess debt has two sides, and it would be remarkably stupid for China to be trapping other countries in debt, when they know they are insolvent and there are no ways to be repaid, so all in all I think China is trying to establish a symbiotic relation bordering colonialism, but that’s not new, actually it is common modus operand for any nation.

I think, the author's supposed national/ethnic bias not withstanding, the article has quoted plenty of statistics based on facts. The usage (or lack of) of Gwadar port or Hambantota airport is public knowledge. Most of Africa is in debt with China, and in all those instances, the Chinese projects have been financed by China, built with materials from China and by imported Chinese labour, many of whom have stayed behind, either to maintain them (dams, roads, power stations) or on Chinese government insistence to the local government, opened up businesses (of mostly importing from China). There are now estimated over 2 million Chinese immigrants in the entire Africa, engaged in business, their presence largely an armtwisting by the Chinese government, and as a result of closing down locally owned businesses and factories.

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